'Tis the season for somewhat infuriating news: The Washington Post reports, "The federal government quietly agreed to forgo billions of dollars in potential tax payments from Citigroup as part of the deal announced this week to wean the company from the massive taxpayer bailout that helped it survive the financial crisis."
On Monday, Citigroup announced it would repay $20 billion in TARP money. But it turns out that on the preceding Friday, Bloomberg News says IRS "issued the guidance Dec. 11, suspending restrictions on loss deductions when companies, such as Detroit- based General Motors Co. and Washington-based Fannie Mae, sold stakes to the government as part of the Troubled Asset Relief Program." One of those companies was, of course, Citigroup, and this ruling preserved $38 billion in deductions for the banking giant!
The Obama administration anticipates a $1.3 billion net profit on its bailout loan to Citigroup, but that's far short of what some say the tax payments would be. A tax accounting expert told the WaPo, "The government is consciously forfeiting future tax revenues. It's another form of assistance, maybe not as obvious as direct assistance but certainly another form."